Wall Street watch out for a new wave of protesting, this time it’s taking shape with investors who demand transparency and responsibility from their 401(k) plans. Those cries are being heard because some plans are adding socially responsible funds to their investment menus. Meaning, mutual funds that invest in or avoid certain companies, based on pre-stated ethical guidelines.
According to Smart Money, The good news for savers looking to add a socially responsible fund to their 401(k)s: Some of the most popular ones used in retirement plans have matched or slightly outperformed the market over the past several years. The TIAA-CREF fund gained 3.48% annualized over the past decade, about even with the Standard & Poor’s 500-stock index; a spokesman for TIAA-CREF says the fund is designed to match, not outperform, the market. The $1.4 billion Ariel Fund (ARGFX) and the $1.1 billion Ariel Appreciation Fund (CAAPX), which both avoid tobacco and handguns and favor companies with good environmental records, have outperformed the S&P 500 and their respective Morningstar categories by about two percentage points over the past 10 years.